A charity set up by Liam Fox, the defence secretary, has been dissolved by its trustees after criticism by the Charity Commission.

The Atlantic Bridge, which had already been suspended for promoting Conservative party policies in defiance of regulations, was founded by Fox and run by his close friend Adam Werritty.

Fox's relationship with Werrity was drawn into question when the Guardian revealed Werritty had visited Fox at Ministry of Defence offices 14 times in the past 16 months.

Fox installed Werritty, his best man and former flatmate, as the executive director and sole employee of the charity in 1997.

The charity was wound up by its trustees on Friday, following the commission's demand last summer that its "current activities must cease immediately" because "the activities of the charity have not furthered any of its other charitable purposes in any way".

The trustees decided to dissolve the charity rather than address the commission's concern that its primary objective appeared to be "promoting a political policy [that] is closely associated with the Conservative party".

A string of senior Tories, including George Osborne, William Hague and Michael Gove, have served on the advisory board of the charity, which was closely linked to neocons in America. Baroness Thatcher was the honorary patron.

The Atlantic Bridge hosted the New York launch of Hague's biography of William Wilberforce.

The charity said its mission was to promote the "special relationship" that flourished between Thatcher and President Ronald Reagan in the 1980s.

Kevan Jones, a Labour MP and former armed services minister, said the dissolution of the charity raised serious issues.

"We need to know who funded this organisation and exactly what Liam Fox and Adam Werritty's roles were," Jones said. "David Cameron has talked about transparency and openness but that is being undermined by Liam Fox.

"This raises yet more questions about the connection between Fox and Werritty and people will expect full answers sooner rather than later. We need to be clear that the activities of the Atlantic Bridge had nothing to do with Liam Fox's activities as secretary of state for defence."

MPs questioned whether Werritty, who has falsely presented himself as Fox's official adviser, had sought to financially gain from the pair's close relationship.

Official records show a trust run by billionaire hedge fund manager Michael Hintze donated £29,000 to The Atlantic Bridge last year. The register of members' interests show Fox travelled on Hintze's private jet from Washington to the UK earlier this year, after giving a speech at an event to mark the 100th anniversary of former President Ronald Reagan's birth.

Hintze, who is one of the Tories' biggest donors, runs the hedge fund CQS and is the world's 880th richest person, according to Forbes magazine.

The commission said its investigation concluded that the charity was established for charitable purposes and was "capable of operating for public benefit. However, its charitable purposes have not been advanced by any of its activities."

It said it asked the charity's trustees to complete a review and later met them to discuss their progress. "During the meeting, the trustees raised concerns about the future liability of the charity and whether, after the review was completed, it would be able to continue to operate," it said.

The trustees later confirmed to the commission that it was "their intention to wind up the charity as they considered that it could no longer continue to operate". The charity was removed from the commission's register of charities on Friday.

Fox and Lord Astor of Hever, a junior defence minister, resigned as trustees of the charity in May 2010.

The trustees at the time of the dissolution were Andrew Dunlop, a former adviser to Baroness Thatcher, Patrick Minford, a professor at Cardiff Business School, and Kay Ord, a friend of Fox who serves with the defence minster on the committee of the Royal British Legion's poppy ball.